HR Expert: What do you need to know about term-time working?

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Q. A client will be employing a new member of staff on a term-time only contract. This is the first time they’ve used such a contract, and they’re unsure as to how they should manage this employee’s holiday, which they will be taking during the school holidays. To make things easier, they would like to pay the holiday as they go each month rather than as and when it is taken. Can you offer my client any guidance on this?

A. Significant changes to the Working Time Regulations 1998 (WTR) have been made in 2024, in particular for term-time only and irregular hours workers. This came as a result of the government’s decision to overturn the Supreme Court’s ruling in Harper Trust v Brazel (2022) which held that holiday entitlement for part-year and irregular hours could not be pro-rated.
Under the WTR, a worker is part-year when, …”under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid.” Term-time working is a typical example of part-year working, as the employees working under these types of contracts are not required to work outside of term-time.

A worker is an irregular hours worker where “in relation to a leave year, if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.”

So that holiday entitlement for these workers could once again be proportional to the hours that they work, the government introduced the Employment Rights (Amendment Revocation and Transitional Provision) Regulations 2023. This means that for part-year and irregular hours workers holiday will accrue, on the last day of the pay period, at the rate of 12.07% (where statutory minimum holiday is given) of hours worked in that pay period.

Your client can only implement this for leave years that start on or after 1 April 2024, so if the organisation has a January to December leave year, this cannot be implemented until 1 January 2025, unless they make the annual leave year for this employee start earlier than January 2025.

Your client also wants to introduce the practice known as ‘rolled-up holiday pay’. This is where holiday pay is calculated as it is accrued and paid as an additional sum each time the worker is paid, rather than when the leave is taken. To do this, your client will need to add on an extra 12.07% (see above) of total pay for work done in the pay period and pay it in each pay packet. The payment for rolled-up holiday must be on the payslip as a separate entry to any other pay, and marked as ‘rolled-up holiday pay’. This method of holiday payment will also need to be outlined in the contract of employment.

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